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EU VAT compliance: beware the web bots

Mon Jun 16, 2014

That was one of the messages that was issued loud and clear at the recent HMRC-organised
conferenceon the new EU VAT changes.

All eMerchants are on EU tax authorities’ radar. They trawl the web searching for non-compliant companies.

During the afternoon session there was a question from the floor regarding the burden that the new rules will impose on SMEs in the UK. A follow-up question queried the EU’s enforcement procedures, especially towards non-EU businesses.

The answer from Andrew Webb, senior policy manager at HMRC, revealed an interesting approach to VAT compliance – tax authorities will be trawling the internet.

While I don’t want to go into the IT that may be available, obviously anyone that wants to supply an eService has to do so over the internet. There are web bots – programs and things that can identify suppliers of services on the internet – that can trawl it automatically. We can then approach things on a risk basis, depending on what we find out from those searches.”

All eMerchants need to realise that big brother is watching: compliance with the new EU VAT rules on the B2C supply of digital services is key.

MOSS VAT compliance penalties

The new rules come into force on January 1, 2015. Penalties will change with the introduction of the new Mini One Stop Service (MOSS).

“At the moment under the VoES [VAT on eServices] system – in the UK at least – there are no penalties or interest for late, or belated, registrations,” said Webb. “That will change under MOSS because here we are looking at a level playing field: a UK business that registers late has penalties and the potential for that exists within our MOSS legislation as well. I can’t speak for the approach of other member states in their approach to VoES but, to date, where registrations have come in late I am not aware of any other member state having an issue with that late declaration, they have accepted them with the payment.”

Webb concluded: “Our experience is that when people are aware of it – they comply. More of the issue is making sure that people are aware of what their responsibilities are in relation to tax in the EU in the first place.”

Commission’s communication plan

To this end Patrice Pillet, the EU’s head of VAT legislation, outlined the Commission’s efforts to engage and educate eMerchants around the world.

This is precisely the reason why the Commission has organised a communications plan. We will organise events in the United States to talk to American companies, as that is where most of these businesses are located. That is to increase voluntary compliance but, in parallel, we are working on making agreements with other countries to improve administrative co-operation and exchange information.”

Forewarned is forearmed and eMerchants must now realise their responsibilities before they are found by the Big Brother web bot!

Contact us

If you need a technical solution for your e-commerce website to comply with the new EU VAT rules, contact Taxamo. We have a full solution that enables merchants to be fully compliant by 1 January, 2015.